The global economy is at a fork in the road, the IMF’s managing director said, warning against “major risk” that advanced economies and some emerging markets recover faster while most developing countries will suffer for the years ahead.
With several countries facing slow rollout of COVID-19 vaccines, Kristalina Georgieva asked whether or not policymakers will take action to prevent this great divergence, a press release issued by the IMF on Wednesday cited her.
This situation has not only worsened the human tragedy of the pandemic, but also the economic suffering of the most vulnerable, she asserted.
Georgieva recalled that the world GDP is expected to increase by 5.5% in 2021 and 4.2% in 2022, however, she said that versus the pre-pandemic period the cumulative per capita income will be down 13% in advanced economies, fall 18% in low-income economies and drop 22% in emerging and developing economies, excluding China.
“In other words, the convergence between countries can no longer be taken for granted,” she underlined.
Georgieva also said the young and the low-skilled women and informal workers will be affected by job losses due to the divergence.
She stated that millions of children have still disruptions to education due to measures against the spread of the coronavirus.
“Think of the challenges ahead: for G20 economies alone [excluding India and Saudi Arabia due to data limitations], total employment losses are projected at more than 25 million this year and close to 20 million in 2022,” she said.